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TOKYO—Mitsubishi Motors Corp., which recently acknowledged it inflated mileage on its models, is forecasting a 145 billion yen ($1.4 billion) loss for the fiscal year through March 2017.

The Japanese automaker said June 22 that vehicle sales will drop around the world, especially in Japan, where it expects a 41 per cent plunge.

The projected loss is a reversal from the 72.6 billion yen profit for the fiscal year ended in March.

Japan’s government found Mitsubishi had overstated mileage on its vehicles by up to 16 per cent. Tokyo-based Mitsubishi Motors had a systematic way of cheating on mileage for eK minicar models, including those it supplied to Nissan Motor Co.

Mitsubishi says it didn’t lie about mileage on models sold overseas.

Nissan has said it is taking a 34 per cent stake in Mitsubishi to help its turnaround, although Chief Executive Carlos Ghosn reiterated to shareholders Wednesday that the deal was not final until “due diligence,” and Nissan was checking into Mitsubishi.

Mitsubishi Motors said last week it will give 100,000 yen ($960) to each Japanese owner of a car with a false mileage claim to compensate for the extra gas costs and for inflating the mileage figure.

Such compensation will cost Mitsubishi 50 billion yen ($480 million), and payments to Nissan and other suppliers will cost another 100 billion yen ($960 million), it said Wednesday.

Slipping sales and expenses related to free inspections and other services in Japan will lower its operating profits by 55 billion yen ($530 million), it said.

Mitsubishi’s latest scandal follows its massive and systematic coverup of defects that surfaced in the early 2000s, which had spanned decades. The automaker has repeatedly promised to fix its ethical standards. The company’s president has stepped down to take responsibility for the new scandal.

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